Euro Rally

EUR/USD – The ECB Steps Up to the Plate, Meantime 1.12-1.15

The Euro extended its decline, dipping 0.36% against the US Dollar to 1.1280 after a failed attempt at the strong resistance level at 1.1500. EUR/USD dropped to an overnight low at 1.12574 on the broad-based US Dollar rebound. All eyes on the ECB today. It’s their turn to step up to the plate and act. Following the Reserve Bank of Australia, Bank of Canada, Federal Reserve, and Bank of England interest rate cuts, President Christine Lagarde and her colleagues need to do more than lower rates.

EUR USD - 1H Chart - Forex Live - 12 March 2020
EUR USD – 1H Chart – Forex Live – 12 March 2020

Lagarde earlier warned that Europe could face a 2008 like economic shock if European governments do not provide a coordinated response. Last night the Italian government earmarked USD 28.3 billion to ease the economic impact of COVID-19 on the country. These concerns are a signal that a big announcement will be made later today.

Meantime we can expect the range between 1.1200-1.1500 to hold. Market positioning remains short of Euro bets. On the day, immediate resistance can be found at 1.1310 followed by 1.1350. Immediate support lies at 1.1250 (overnight low 1.12574) followed by 1.1220. The US Dollar’s rebound off it’s lows are a result of expectations for a fiscal stimulus from the US. If Europe comes back with one of its own, the Euro will climb, and the Greenback will fall. For now, trade the 1.1220-1.1380 range with the wider 1.12-1.15 in mind.

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